In a factory near Chicago, under a roof covering 11 acres, television sets are moving slowly, then halting, then moving again in single file along conveyor belts on seven parallel assembly lines.
Toward the end, the TVs are turned on but not tuned in, emitting an eerily silent, gray glow, an endless procession of unseeing, cyclopean eyes.
When they reach the lower level, the sets come to life as workers adjust and align test patterns in the vivid reds, blues and greens that are the basic hues in a color cathode tube.
It`s an impressive sight, a tribute, it seems, to the ingenuity and productivity of the great American industrial machine.
Well, it is and it isn`t.
The manufacturing plant is in Franklin Park, and the employees on the assembly line are Americans.
But the owner is the Matsushita Electrical Co. Ltd., of Osaka, Japan, which in 1974 bought this plant from Motorola Inc., an American company that had decided to stop making its Quasar TVs.
Under Motorola, the facility was failing, plagued by a poor quality record that was reflected in annual losses in the millions.
For every 100 sets that rolled off the line, there were, on an average, 150 defects. These imperfections and glitches, large and small, had to be corrected before the sets were shipped, which was costly and time-consuming. Otherwise, the company would have to bear the expense of future repairs.
In the last decade, Matsushita has accomplished a stunning turnaround at Franklin Park, making it profitable, more than doubling productivity and dramatically reducing the defect rate from 150 percent to less than 2 percent –all with fewer workers.
Business experts say that Matsushita`s minor miracle is simply part of a pattern.
A Columbia University study, cited recently in U.S. News & World Report, has found that Japanese companies with U.S. operations generally outperform their American counterparts.
We`ve been aware for some time that when it comes to business, Japan knows what it`s doing. The global sweep of its economic empire is one of the most remarkable achievements in the latter half of this century.
It`s an achievement, however, that leaves us with mixed feelings.
As consumers, we find Japanese products easy to swallow. As competitors, we find Japan`s success hard to stomach.
We love our Panasonics and Sonys, Nissans and Toyotas, Seikos and Sanyos, Toshibas and Hondas. Those strange-sounding names of a generation ago have become familiar brands, as much a part of our lives and vocabulary as Ford and Zenith, Chevy and GE.
But buying them can make us feel somewhat uneasy, a little guilty or even vaguely unpatriotic.
We realize that because it`s so one-sided, this peaceful invasion of imported goods is costing us, as a nation, money and jobs. We`ve read about the serious balance-of-payments problem we`re having with Japan and about how the Japanese don`t play fair with their trade policies.
The inroads by Japan into markets once dominated by American companies, particularly autos and electronics, also has been a blow to our pride, for it indicates a slippage in our industrial performance.
Despite books about the excellence of some American companies, the overall record of our big corporations is discouraging. Writing recently in The New Republic magazine, Robert Reich, a Harvard University economist, gave this damning assessment of our woes:
”By almost any measure, America`s top corporations have performed poorly over the past 15 years. They have lost markets to the Japanese and lesser developed nations. Their rate of productivity has waned. They have failed to innovate. Many of their products have been shoddy and unreliable. Many of their employees have been disgruntled.
”Since 1970, America`s 500 largest industrial corporations together have failed to generate a single new job. And their earnings have been singularly disappointing; adjusted for inflation, the combined net profits of the same 500 actually declined 20 percent between 1974 and 1983.”
How does Japan do it? How does a small country with few natural resources become an industrial juggernaut? How do the Japanese maintain such high productivity and high quality?
One explanation is that they enjoy advantages we don`t have and can`t duplicate.
Their pay scales are lower than ours, they are aided by government cooperation and support that is alien to us, and they benefit from a homogeneity, a way of life and a sense of mission that, in the view of writer James Fallows, make them ”seem more like a tribe, a family-state, then anything we can recognize as a pluralistic society.”
But perhaps the most important reason, some experts say, lies in a philosophy of business management that contrasts sharply with ours and proves its superiority in the marketplace.
Skeptics say that the differences have been exaggerated, that, in any event, the Japanese approach can`t be exported that easily, that it loses a lot in translation. The Columbia study refutes this, offering evidence that the Japanese get the same results here as they do at home.
The implications are both hopeful and unsettling.
The good news is that there`s nothing wrong with the American worker. The bad news is that American management could stand some retooling, if not a drastic overhaul, because the bottom line suggests that the Japanese are better bosses than we are.
Apparently, the giant Japanese corporations like Matsushita are following some revolutionary concepts.
They`re emphasizing the quality of the product over the number of units produced, they`re listening to workers, they`re concentrating on employee morale, they`re downplaying distinctions between manager and worker and they`re providing the best equipment money can buy instead of shooting for short-term profits.
The situation is not without irony. After all, the Japanese used our system as a model. And if we`re smart, the experts say, we`ll emulate the emulators.
We won`t have to go to Japan to learn. The Japanese are already here. In the interest of extending their reach and soothing American concern by sharing some of the wealth, Japanese corporations now own or control more than 300 subsidiaries in this country, according to one recent count.
Chicagoans have only to drive to Franklin Park. By looking at the specific steps Matsushita took to change the fortune of the factory there, we may be able to understand better how the Japanese put their theories into practice, why they`ve been beating us at our own game and how we can compete more effectively.
Matsushita produces its own line of Panasonic sets and also has continued Motorola`s Quasar brand. An adjacent plant also makes microwave ovens.
Richard A. Kraft is the president and chief operating officer of Matsushita Industrial Co., the name of the subsidiary here. He has a special perspective, for he began 34 years ago as an engineer for Motorola and was a Motorola vice president at the Franklin Park plant when it was acquired by Matsushita.
Kraft is sold on the Japanese methods. ”They have a different way of thinking, and we`ve learned a lot from them,” he said. ”Their focus is on the product–the quality of the product.”
The new owners began by updating the production lines. ”From 1975 through 1977,” Kraft said, ”we tore out the old belts, line by line, and replaced them with state-of-the-art lines.
”The Motorola lines were very old, crude, continuously moving belts. You`ve seen Charlie Chaplin movies or Lucille Ball shows where the cakes come off the conveyor belt and when you get behind, the cakes start piling up all over the floor. Well, ours were something like that.”
The fact that the lines halt, as was mentioned in the first paragraph of this article, is crucial. The new lines added foot pedals at each station so workers could stop the belt until they had completed their tasks. Under the old system, workers walked alongside the moving belt to perform their part of the assembly. ”If they didn`t finish, the belt kept on,” Kraft said.
”And half the time, they didn`t finish,” said John Westell, a product supervisor and another former Motorola employee.
”Part of the thinking was that you can`t trust the worker,” Kraft said. ”The Japanese trust the worker. They realize that problems come from worker frustration, and they do everything to eliminate this and make it easier for the worker to do his job.”
Matsushita redesigned all models to make them easier to produce. ”The old designs were much more complicated for the worker,” Kraft said. ”And with the new lines, 60 to 75 percent of the work can be done automatically.
”The second order of business,” Kraft continued, ”was to instill an atmosphere that said quality is our primary goal. If you look around, it may not look much different than it was. We have posters stressing quality and so did Motorola. It`s up to the management to communicate the message that quality is all-important.
”We do that in two ways. First, by The workers know that when the chips are down, we make decisions that support quality.”
Sets are randomly pulled from each line and tested. If two major defects are found in the 1,000 sets from one line, the day`s entire production is held and rechecked. There is only one shift, because Matsushita believes quality can`t be maintained with more.
The wage scale for the nonunion work force is comparable to other manufacturing companies, both union and nonunion, in the northwest suburban area, executives say.
Attentive to morale, the new management improved the lighting and installed lockers for all workers, who previously had to hang their coats on their chairs or improvise storage for other personal items. Heavy lifting is no longer required; machines do the hard work.
For Matsushita, orderliness leads to profitability. The enormous plant is incredibly neat, immaculate and uncluttered. For five minutes at the beginning and end of the day`s shift, workers clean their own areas. ”This means we need only four janitors for a space of 500,000 square feet,” Kraft said.
Matsushita also demands simplicity and clear goals. ”Our annual business plan,” Kraft said, ”is six pages long. We work for weeks to reduce it to this length. Under the American system, the plan would be between 75 and 100 pages. You had to read it like a book, it was difficult to understand and it was hard to measure your results because it was so complex it was open to misinterpretation.”
To stimulate better communication, formerly isolated departments were moved to a central area near the assembly lines, and instead of separate offices, managers now work at desks in large, open rooms.
Not everything makes it across the Pacific. In Japan, Matsushita workers wear uniforms, gather before work each morning for calisthentics, then start the day by singing the company anthem. American workers wear their own clothes and forgo group exercise and song.
Neither does the Franklin Park factory follow the example of other Japanese operations that do away with executive perks. A parking space is provided for Kraft`s Cadillac.
”There are two sides to this,” he said. ”You can be one of the guys, or you can motivate the workers to rise in the company and enjoy what the managers have. I believe leaders should lead, but that doesn`t mean I sit on a throne.”
It also means he doesn`t act like a king. ”As president, I could make all the decisions myself,” Kraft said. ”It would be easier. I could give immediate answers to every question–do it my way or else–but that`s a ridiculous way to run a company.”
The Japanese seek a thorough gathering of information and consensus before action. The assembly-line employee, considered a valuable resource, is included as part of the decision-making process. This has been called the bottom-up style of management. American executives tend to follow a top-down approach, making decisions often without consulting production-line workers and lower-level managers.
”Consensus is talking to as many employees as possible,” Kraft said.
”We spend time gathering support before a final decision is made. Everyone must understand what we want, and everyone must contribute ideas.
”Ultimately, you, the manager, must make the decision. The bottom-up style doesn`t mean it`s a vote, and it doesn`t mean the bottom level runs the place. But everyone contributes, and you take the time required to reach the best decision. We may take longer than American companies to act, but in the long run, we save time by making fewer errors.”
Matsushita was formed in 1918 by Konosuke Matsushita with a $50 investment. Now 91 and still active, the founder is viewed as much as a philosopher-sage as a businessman and his writings are treated with great respect.
Addressing the necessity of a ”business philosophy,” Matsushita has written: ”I think the mission or principal role of enterprise management consists in responding to and fulfilling the desire to maintain and improve the quality of human life. . . . Some people think the purpose of an enterprise is to make a profit. . . . More basic is the effort to improve human life through enterprise management. Profit becomes important only to better pursue this basic mission.”
”These things sound mystical, even religious in tone,” Kraft said,
”but they are the heart of the company.”
Each year, the parent company selects a slogan. Signs announcing the current ”Create the Future” in four languages appear throughout the factory. Interviews with other managers offer further insights into the new order. A sampling:
Denis Ossola, director of operations: ”The Japanese are more flexible on how they spend their money on capital equipment. American companies play it close to the vest in terms of getting money back from their investments.”
Nicholas Demas, direct and general manager of personnel and administration: ”The managers are visible. Dick Kraft, the president, shows up for employee activities. When we have a retirement party for a 30-year employee, he`s there. Marge Flynn, my assistant, and I encourage activities. We had more than 800 entries on our quality slogan contest–out of 1,400 employees. We have a variety of clubs and parties through the year. There are picnics, Easter egg hunts and a Halloween costume contest, which Dick Kraft judges. We have an employee suggestion program, and we respond quickly to each idea.”
James O`Hara, a personnel manager: ”Our absenteeism is about 2 percent a week. It used to be as high as 12 to 14 percent.”
Ed Samples, an assembly line manager: ”We used to have to shut down for a week to take inventory. Now we do it every month in three to four hours; my people do it in two hours. You wouldn`t recognize this place from 12 years ago.”
One program that indicates the success of employee involvement is the
”quality circle,” which many Japanese companies use. The circles are voluntary, and workers are given months of instruction on how to make them work.
The aim is to have these small groups choose a particular phase of production they believe needs improvement, analyze the problems and propose solutions.
On a recent afternoon after the plant closed, three quality circles gave their reports at a periodic meeting before managers and fellow workers.
After distributing their written reports to the audience, each team, composed of from 4 to 10 workers, explained their findings.
The speakers were poised and concise. Two groups that worked together found a way to facilitate model changes that would result in annual savings of $453,654. The ”Fact Finders” circle discovered a way to reduce soldering errors by 40 percent. ”The Challengers,” who met twice a week during lunch hours, redesigned a safety label that eliminated a chronic, inefficient attachment of the warning.
At the end, president Kraft expressed his ”amazement and delight,” then shook hands with the workers. It was like walking into a Frank Capra movie. Old Konosuke Matsushita would have been proud, and American corporations might want to take note.
